China's anti-graft drive is making state media bolder

BEIJING (Reuters) - China's campaign to stamp out corruption has emboldened the country's normally docile state media to push the barriers in exposing corporate wrongdoing.

While it's still off-limits to delve too deeply into what government leaders and powerful institutions may be up to, recent 'undercover' state TV reports accusing state-owned Bank of China of aiding money laundering and a U.S.-owned food supplier of safety violations suggest the media are more ready to run critical reports.

China's central bank said earlier this month it was investigating allegations by state broadcaster China Central Television (CCTV) that Bank of China offers a service to help Chinese move more of their cash offshore than is allowed. Bank of China, the country's fourth largest lender, has denied the allegations.

"Part of the reason the report went forward was because of the anti-corruption campaign," said a CCTV network employee. "It isn't like corruption never existed before, but now there's a bit more room to report on it."

Five current and former CCTV employees told Reuters that while the network had run critical reports on state-owned enterprises before, it was unusual to target a major entity such as Bank of China. All asked not to be named because of the sensitivity of the matter. CCTV could not be reached for comment.

"The Bank of China investigative reporting by CCTV is definitely part of the government-wide push to clamp down on corruption and related activities," another CCTV insider said, adding that Chinese-language TV channels were putting more resources into chasing investigative stories.

Foreign companies operating in China, and their local suppliers, are also in state-media's crosshairs.

Several foreign fast-food brands, including McDonald's Corp, pulled the company's products from their outlets and switched suppliers. Regulators in Shanghai said Husi forged production dates on smoked beef patties and sold them after they had expired.

Late on Saturday, OSI said on its website it was withdrawing all products made by its Shanghai Husi business, and was carrying out an internal investigation into senior management that could end in legal action against those responsible.

"Reports on food safety have a broad impact and the (Dragon TV) investigative report was totally on the mark," said Zhang Zhi'an, a journalism professor at Sun Yat Sen University in Guangzhou. "There have been more and more reports on food safety."

A worker at an employment agency near the Shanghai Husi factory said an undercover TV reporter had come in seeking a job at the plant. "The reporter said he was from Sichuan (province), and wanted to enter the factory," the worker said. "He looked honest to me."

The reporter could not be reached for comment, and Dragon TV has declined to comment on the making of the program.

UNDER PRESSURE

State media sources interviewed by Reuters said they knew of no explicit edict from Beijing to report on corporate wrongdoing - but that such investigative stories fit with the anti-corruption drive and generated strong viewing numbers.

"The Bank of China story could be done in part because of the wider political environment," the first CCTV source said.

State media often avoid reporting on powerful state-owned companies because of their political ties, media insiders said. It would have been easy for Bank of China to pressure CCTV to kill the story if it knew beforehand that it was to be aired, said a person with direct knowledge of CCTV's editorial processes.

"In China, if you contact the subject of your report before publishing, they will almost certainly use administrative means to suppress the report," the person said. "If it does come out, they can also use connections to get the report 'harmonized'," he added, using a colloquialism for online censorship.

But China's state media is far from being independent or filling a genuine watchdog role, media experts said. By and large, it only reports on important corruption cases to the extent that the government itself allows them to become public.

"Reporting on local and foreign companies is all well and good - as long as it doesn't disturb those in the government with money and power," said Zhan Jiang, a journalism professor at the Beijing Foreign Studies University.